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Developer zeros in on ownership.

While Cali Associates has been one of the most active office developers in New Jersey in recent decades, today the firm has put down its shovel and is devoting most of its muscle to being an attentive and aggressive owner.

According to Brant Cali, the firm is focusing on retaining tenants and space and operating its 13 office properties located mostly in Northern New Jersey. And like other strong owners of Class-A space, the developer is foregoing healthy profits for tenants.

"We've still been able to maintain our property and attract tenants, " said Brant Cali, partner of the Cranford, New Jersey-based Cali Associates.

Last year alone,two new Cali buildings - Liberty Hall II in Cranford and 20 Commerce Drive in Union - came on line. At 150,000 square feet and 176,000 square feet respectively, the two buildings brought the Cali portfolio, including 6,000 residential units, to more than 2.8 million square feet.

But Cali is meeting the challenge. As of September of this year, the firm reported 350,000 square feet in new leases and renewals, which is already in excess of transactions completed in 1991.

Cali recently leased 25 percent of 20 Commerce Drive, also known as "The Clocktower Building, to Public Service Energy & Gas. The utility will operate a 24-hour emergency repair service out of the 46,000-square-foot floor. Proctor & Gamble took another 21,000 square feet at 20 Commerce Drive. Other leases at the building were with The Elizabeth Agency, Inc. for 11,000 square feet and Jersey Mortgage Company of New Jersey, Inc. for 5,600 square feet. The building is currently 76 percent leased.

Other signings include Arista Marketing for 25,000 square feet at Cali Corporate Center in Clark.

Bold Move

With Liberty Hall II, Cali made an unusual move for a development company that traditionally retains what it builds. When Schering-Plough expressed an interest in buying residentially-zoned land on the Liberty Hall property - on the former Kean estate, they held the meeting in Liberty Hall II. Schering-Plough executives asked to see the building and soon after they made an offer to buy it.

Cali decided to sell the building along with nine river-front acres. They moved the two Cali tenants that were in the building to another Cali building and a tenant they were negotiating with for a floor and one-half was also "convinced" to move there. "That is normally not the way we function, but in this market it made sense," said John J. Cali, Brant's father and the founding partner of Cali Associates.

And Schering Plough, Cali noted with a grin, got a good deal as well.

"This is a building we planned to keep so everything in the building was meant to last," said the elder Cali.

Tenant Retention

In today's competitive environment, Brant said, tenant relations are critical because they are basically a "local" developer who depends heavily on word-of-mouth.

"We're not attracting tenants from all over," he said. "The tenant retention and loyalty is extremely important. We're not a Trammell Crow."

The owner distributes the "Caligram" newsletter to its tenants and they sponsor activities for occupants of their buildings. Last month, more than 4,000 tenants at Cali Associates' properties across the Garden State took part in "Meet Your Corporate Neighbor" ice cream parties.

"Our basic philosophy is to pay close attention to tenants, " said Brant. "That's why we don't have buildings outside New Jersey."

At each Cali property there is an on-site manager who is a partner in the building.

Sharing Talents

While speculative development is on hold, Cali is exploring other avenues to which it can apply its talents and resources. There is a deal in the works with a lending institution in which Cali would take over the Overlook properties in Little Falls, New Jersey.

"There's not a lot of competition because not a lot of people want to pick up the responsibility," said John Cali.

Brant Cali said they are also alert to potential acquisitions and build-to-suit opportunities.

They are capitalizing on their construction background and they have a few hundred thousand square feet under construction as general contractor or construction management.

"I guess we've learned how to do everything as cost-effectively as possible because we were doing it for ourselves," added Brant.

Cali Associates has weathered its share of market downturns. The firm was founded 40 years ago by brothers John and Angelo Cali and long-time business associate and childhood friend Edward Leshowitz. The firm had its beginnings in the building and management of residential real estate. In the late 60's, they broke into office development.

Today, joined by the next generation - sons John R. and Brant, Cali is one of New Jersey's foremost developers having built 4 million square feet of commercial space, more than 1 million square feet of industrial space and more than 6,000 residential units, including single-family homes, apartments and condominium townhouses.

Cali reports an overall 93 percent occupancy rate in its office portfolio, which in addition to 20 Commerce Drive and Liberty Hall I, includes: The 880-acre, six-building Cranford Business Park in East Orange, New Jersey; the 240,000-square-foot 101 Eisenhower Parkway office building in Roseland, New Jersey; and the 235,000-square-foot Cali Corporate Center building in Woodcliff, New Jersey.

Cali's "signature" property, and its largest to date, is International Financial Tower situated in Jersey City near the Hudson River waterfront. The building was designed for both first-class office space and heavy computer and back-office operations. Seventy-five percent occupied, the building is 50 percent leased to the Pershing Division of the New York brokerage firm, Donaldson, Lufkin & Jenrette Securities Corporation. Tbe building also houses the first data center built out of Japan for NTT DataCommunications Systems Corporation.

For now, Cali Associates is staying on a steady course and the partners are optimistic about the future.

"We're still the most populated area - The Northeast," Brant said. "The services are still intact. At a new level of value, New Jersey and the metro area will grow."
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Title Annotation:Cali Associates focuses on property ownership and management
Author:Fitzgerald, Therese
Publication:Real Estate Weekly
Date:Oct 14, 1992
Words:1000
Previous Article:Sotheby's exclusive.
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